Setting your Fees for Private Practice
Your fees must do four things:
· They must provide you with a personal income appropriate to your skills,knowledge and experience.· They must meet
the costs of running your business.· They must provide a surplus, or profit, which will enable you to invest in yourbusiness and allow it to grow in size, services and quality; and to recompenseyou, the owner, for the risk that you are taking with your resources.· They must enable you to compete effectively in your chosen market.Let's start close to home with your personal income.Make a cool assessment of what your skills, knowledge and experience wouldbring you in the marketplace as an employee. Avoid any tendency to be modest.You are presumably good at what you do or you would not be offering yourself toclients. What is more, you have to build the client's confidence in using you andthat means that you need to appear to be the kind of person who can commandhigh earnings. Think for the moment only in terms of salary. Keep it simple.Let me assume that you are worth £50,000 a year for the sake of example. Youwould expect to be paid, if you were in employment, for working days, high daysand holidays. That is, you would expect to be paid for 261 days each year. (You donot usually get paid for weekends and 365 less 104 Saturday and Sundays comesto 261).Divide £50,000 by 261 and you get £191.50 per day. That is your
Of course, you are probably worth a great deal more than £50,000 a year. I am justusing simple figures for the sake of example.
Forecast the days you expect to be able to sell, on average, each month. Try not tobe overly optimistic or you will fail to cover your costs fully. On the other hand, if you are unduly pessimistic will make your forecast a self-fulfilling prophecy byestablishing an unrealistically high daily rate.My guesstimate of what you might reasonably aim for is 12 days each month. That isyou will be billing clients for 12 days of the 20 that are available each month onaverage after fluctuations caused by holidays, variations in the business cycle andother activities that are not directly chargeable.
List and cost all your monthly overheads.